marker and business tsructures

sole proprietorship

• Advantages: Easy to start, full control, keep all profit

• Disadvantages: Hard to raise money, full personal risk

• Characteristics: One owner, simple taxes, not separate from owner

sole proprietorship advantages

easy to start, full control, keep all profits

sole proprietorship disadvantages

hard to raise money, full personal risk

sole proprietorship characteristics

one owner, simple taxes, not seperate from owner

partnership

• Advantages: More money, shared work, shared ideas

• Disadvantages: Share profits, possible conflicts, shared risks

• Characteristics: Two or more owners, shared control and responsibility

partnership advantages

more money, shared work, shared ideas

partnership disadvantages

share profits, possible conflicts, shared risks

partnership characteristics

two or more owners, shared control and responsibility

franchise

• Advantages: Known brand, help from main company

• Disadvantages: Costs a lot to start, less freedom

• Characteristics: Business uses another company's name, rules to follow

franchise advantages

known brand, help from main company

franchise disadvantages

costs a lot to start, less freedom

franchise characteristics

business uses another company’s name, rules to follow

corporations

• Advantages: Easy to raise money, owners (shareholders) not personally responsible

• Disadvantages: Hard to start, lots of rules and taxes

• Characteristics: Owned by shareholders, legal separate person

corporation advantages

easy to raise money, owners (shareholders) not personally responsible

corporation disadvantages

hard to start, lots of rules and taxes

corporation characteristics

owned by shareholders, legal seperate person

name the four BUSINESS structures

sole proprietorship, partnership, franchise, corporations

perfect competition

• Qualities: Many sellers, same product, easy to join

• Characteristics: No control over price, prices stay low

• Example industries: Farming, vegetables, basic grains

perfect competition qualities

many sellers, same product, easy to join

perfect competition characteristics

no control over price, prices stays low

perfect competition examples

farming, vegetables, basic grains

monopolistic competition

• Qualities: Many sellers, slightly different products

• Characteristics: Some control over price, lots of ads

• Example industries: Restaurants, clothing, shampoos

monopolistic qualities

many sellers, slightly different products

monopolistic characteristics

some control over price, lots of ads

monopolistic examples

restaurants, clothing, shampoos

monopoly

• Qualities: Only one seller, no competition

• Characteristics: Sets price, hard for others to join

• Example industries: Local water company, electricity in some areas

monopoly qualitiea

only one seller, no competition

monopoly characteristics

sets price, hard for others to join

monopoly examples

local water company, electricity in some areas

oligopoly

• Qualities: Few big sellers, same or similar products

• Characteristics: Some price control, hard to enter market

• Example industries: Car companies, cell phone providers, airlines

oligopoly qualities

few big sellers, same or similar products

oligopoly characteristics

some price control, hard to enter market

oligopoly examples

car companies, cell phone providers, airlines

name all four MARKET structures

perfect competition, monopolistic competition, monopoly, oligopoly

definition of money

• Used to buy things (medium of exchange)

• Used to show value (unit of account)

• Used to save value for later (store of value)

characteristics of money

durable, portable, divisible, acceptable, limited in supply, and uniform

barter system

trading goods or services without using money

3 types of currency

commodity, representative, fiat

commodity currency

has value itself like gold

representative currency

backed by something valuable

fiat currency

has value because the government says so

what type of currency does the us have?

fiat

federalists (view/leader)

wanted strong national government, led by alexander hamilton

antifederalists (view/leader)

wanted strong state government, led by thomas jefferson

who first wins the argument between state and national banking

federalists (national bank created)

when was the federal reserve created?

1913

where is michigan’s regional federal reserve branch located?

chicago

FDR’s bank recovery plan

closed all banks for a few days (bank holiday) and made rules to make banks safe and strong

banking after the great depression

more rules to protect people’s money and FDIC was created to insure bank accounts

what is the best bank account if you make too many withdrawals?

a checking account

what accounts pay high interest?

savings, money market, CDs

what account pays low interest?

checking account

how do credit cards work?

you borrow money from the bank and pay it back later, often with interest

how does a debit card work?

takes money directly from your bank account

is a debit or a credit card safer?

credit cards are usually safer (better fraud protection)

what is a mortgage used to pay?

to buy a house

define interest

the cost of borrowing money or the money earned on savings

define principal

the original amount of money you borrow or save

define compound interest

when you earn interest on your money and also on the interest you already earned.

Simple example:
If you save money in a bank, it grows over time—each year you earn interest on a bigger amount.

define money supply

the total amount of money in the economy

define liquidity

how easy it is to turn something into cash

whats an M1

a way to measure the money people can use right now (more liquid); money you can spend fast

whats an M2

measures everything in m1 plus money that takes a little longer to access (less liquidity); m1 + money you can spend soon

what is fractional reserve banking?

a system where banks keep part of your money in the bank and loan the rest to others

ex: if you put $100 in the bank, the bank might keep $10 and lend $90 to someone else

whats a CDs?

type of savings account where you lock your money in the bank account for a certain time and in return, the bank gives you a higher interest rate.